Interim Housing Management Costs
|Applicant||City of Houston|
Citation:FEMA-3216-EM-TX, City of Houston, Interim Housing Management Costs,
Summary:The City of Houston (Applicant) provided sheltering services for approximately 150,000 Hurricane Katrina evacuees. The Applicant retained two professional service firms to handle the day-to-day administration and management of the interim housing program. FEMA approved $48,962,351 in PW 689 for project management cost for the Interim Sheltering Program. Subsequent to the approval of the final version of PW 689 in August 2007, the Applicant requested $120,110 for preparing for an Office of Inspector General audit, $83,308 for verifying occupancy of rental units, $169,078 for conducting post-payment reviews, and $232,696 for digital scanning of program documents. FEMA determined that the statutory administrative allowance covered the claimed costs, denied the request, and prepared PW 744 for zero dollars. The Regional Administrator supported this determination on first appeal.
On February 4, 2008, the Applicant submitted its second appeal requesting $605,191. The appeal reiterates that no statutory limitation for administrative costs exists and that Congress authorized 100 percent Federal funding for assistance Texas provided in connection with Hurricane Katrina. In addition, it contends that the audit expenses should not be considered final audit activities and the costs associated with scanning legal and accounting documents directly relate to delivering disaster housing services and satisfies document retention requirements.
Issues:Are the requested costs eligible for direct reimbursement?
Rationale:Section 202 of the Disaster Mitigation Act of 2000
June 29, 2009
Alternate State Coordinating Officer
Governor’s Division of Emergency Management
5425 Polk St., Mail Slot O
Houston, TX 77023-1423
Re: Second Appeal–City of Houston, PA ID 201-35000-00,
Interim Housing Management Costs, FEMA-3216-EM-TX, Project Worksheet (PW) 744
Dear Mr. Anders:
This letter is in response to your letter dated February 4, 2008, which transmitted the referenced second appeal on behalf of the City of Houston (Applicant). The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $605,191 in additional funding related to managing the Interim Housing Program.
In September 2005, the Applicant began providing interim housing for approximately 150,000 Hurricane Katrina evacuees. The Applicant retained two professional service firms to handle the day-to-day administration and management of the Interim Housing Program. FEMA reimbursed the Applicant $48,962,351 (PW 689) for project management costs related to the Interim Housing Program. Subsequent to FEMA’s approval of the final version of PW 689 in August 2007, the Applicant requested an additional $804,834 in project management costs. These costs consisted of $120,110 for preparing for an Office of Inspector General audit, $83,308 for verifying tenant occupancy, $169,078 for conducting post-payment reviews, $232,696 for digital scanning of program documents, and $199,642 for preparing contractors’ invoices. FEMA denied this request because it determined that PW 689 reimbursed the Applicant for all eligible project management costs and because the requested costs were considered eligible under the subgrantee statutory administrative allowance authorized in section 406(f) of the Stafford Act. Consequently, FEMA prepared PW 744 for zero dollars. The Regional Administrator sustained this determination on first appeal.
On February 4, 2008, the Applicant submitted its second appeal requesting $605,191, which did not include the costs for preparing contractors’ invoices. The Applicant stated that it was entitled to the requested costs because section 324 of the Stafford Act repealed section 406 (f) of the Stafford Act. Therefore, there is no statutory limitation on direct expenses. In addition, it stated that the $372,495 requested for audit expenses were direct program costs, not statutory administrative costs (final audit activities). Also, the $232,696 for scanning documents were
eligible because scanning legal and accounting documents directly relates to delivering disaster housing services and satisfies document retention requirements of 44 CFR §13.42(d), Retention and access requirements for records, Substitution of microfilm. On May 20, 2009, the Acting Assistant Administrator for Disaster Assistance met with representatives of the Applicant in Washington, D.C. to discuss the appeal.
Section 202 (2) (i), Interim Authority, of the Disaster Mitigation Act of 2000 states, “Until the date on which the President establishes the management cost rates per section 324 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act…section 406(f) of the Robert T. Stafford Act (as in effect on the day before the date of the enactment of this Act) shall be used to establish management cost rates.” Section 324 of the Stafford Act defines “management cost” as “any indirect cost, any administrative expense, and any other expense not directly chargeable to a specific project under a major disaster, emergency, or disaster preparedness or mitigation activity or measure.” Based on a review section 202 of the Disaster Mitigation Act of 2000, I have determined that the costs the Applicant incurred to prepare for the Office of Inspector General audit and to scan project documents are not management costs as defined by section 324 of the Stafford Act. Instead, they are project costs directly chargeable to the Interim Housing Project and are eligible for reimbursement. In addition, the costs the Applicant incurred to verify tenant occupancy and to conduct post-payment reviews are direct projects costs and are eligible for reimbursement. Accordingly, I approve the appeal for $605,191. By copy of this letter, I request that the Acting Regional Administrator take appropriate action to implement this determination.
Please inform the Applicant of my decision. This determination is the final decision on this matter pursuant to 44 CFR §206.206, Appeals.
Elizabeth A. Zimmerman
Disaster Assistance Directorate
cc: Gary Jones
Acting Regional Administrator
FEMA Region VI